Dave Jones to head cannabis working group

Published 09 August 2018

Last Updated 09 Aug 2018 15:19

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Emerging risks

Legal & regulation

North America

Insurance

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The National Association of Insurance Commissioner’s (NAIC) has appointed California Commissioner Dave Jones as chair of the organisation’s new Cannabis Insurance Working Group.
Jones advocated for establishing the working group at the NAIC’s annual summer meeting, stating: "cannabis businesses face insurance availability and insurance coverage gaps - which means that those who shop, those who work in, those who sell goods or services to, or those who own, invest in or operate cannabis businesses may not have access to insurance to help them recover if there are accidents, injuries, property damage, or any of the things insurance typically covers”.
The marijuana industry is currently worth roughly $7.7bn on a global scale according to the Brightfield Group, with that amount set to more than quadruple if the current rate of legalisation continues around the globe, not just in the US.
So far a total of 39 states have legalised cannabis in some fashion, either for recreational or medical use, although the majority have legalised it for medical purposes only.
Colorado and Washington were the first two states to legalise the recreational use of cannabis in 2012.
Jones has been a vocal proponent of enticing insurers to provide coverage for cannabis farmers following legalisation for recreational use in California in 2016.
He oversaw the first filing and approval of commercial insurance for the cannabis industry in November, prior to which no admitted carriers were offering insurance to cannabis-related firms due to a host of issues, including stigma against the nature of cannabis, and questions over federal compared with state legality.
The number of cannabis-related agents, brokers, and insurers in California has risen to roughly 113 firms, an increase from just 4 months ago when less than a hundred were recorded.
"As state insurance regulators, one of our responsibilities is to understand new legal businesses and their insurance needs, and then work to encourage the availability of insurance to meet these new risks and coverage needs,” Jones said.
While cannabis is an increasingly lucrative business, it is still not legal on a federal level meaning that at any moment the federal government could clash with states that have legalised the use of cannabis, and courted investments from cannabis firms.
The working group will consider the regulatory issues surround insurance of the industry, and will also develop white papers containing regulatory guidelines when appropriate.

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